**2. Crowdfunding: origin and diffusion in Italy**

The crowdfunding consists in the request to the public for financing, typically through an online platform, from subjects who need funds to develop projects or for personal purposes [1, 2].

The author of an entrepreneurial, cultural or social project can raise money by engaging the crowd directly to obtain the useful liquidity for the realization of the same project [3]. Unlike the classic request for a loan, crowdfunding guarantees to the borrower the possibility to contact, using online portal, a wide and heterogeneous audience, in which there are potential lenders. With the help of the lenders, in fact, it is possible to cover costs of various kinds, especially if the resources obtained from traditional funding sources are insufficient [4].

The phenomenon of crowdfunding has developed primarily in the Anglo-Saxon territory, and then it has spread in Europe and America. In particular, the first project funded by crowdfunding regards an Anglo-Saxon band in 1997 [5]. The musical group, known as Marillion, unable to bear the cost of their North American tour, turned to fans by launching a fundraiser online, with which they obtained 60,000 dollars. In 2001, the band used the same mechanism to record a new album. In 2008, former US President Barack Obama funded his election campaign through crowdfunding [6].

In Italy, crowdfunding started to spread very soon [7, 8]. However, the country did not take the typical advantages of the first mover due to the internal national peculiarities [9]. In fact, while in other economies the phenomenon was beginning to flourish, in Italy, crowdfunding has encountered more difficulties. The elements that have slowed the development of the phenomenon are the characteristics of the entrepreneurial system, the long bureaucratic chain, together with the high rate of digital illiteracy and the scarce diffusion of online payment systems [10].

In Italy, the first signs of crowdfunding took place in 2005 when Produzioni dal Basso launched an online service to finance projects on the web.

After that, some platforms of reward and donation crowdfunding have spread.

In 2013, there was a boom in the creation of crowdfunding platforms and do-it-yourself portals also began to emerge. This diffusion was supported by the issuing of the provision with which an ad hoc regulation for equity-based crowdfunding was introduced in the Italian legal system.

Next, in 2014, there have been two predominant tendencies, namely:


These trends led to the emergence of platforms based on civic models, based on royalty and invoice trading.

**217**

20264 of 17 January 2018).

*Crowdfunding: The Case of Italy*

occurred.

*DOI: http://dx.doi.org/10.5772/intechopen.90940*

based market have also been launched [13].

multinational platforms.

and segmentation. The main trends are as follows:

to traditional fundraising channels" [13].

are becoming part of the local economic fabric.

**3. Italian regulation: problems and prospects**

the collection of savings from parties other than banks.

Over the last few years, there has been a growth in the various types of crowdfunding portals. In particular, crowdfunding portals for real estate, financing through lending-based loans for the installment payment of purchases on e-commerce sites and the first industry index (Italian Equity Crowdfunding Index) for the equity-

Today, the crowdfunding sector in Italy shows substantial market specialization

• Decentralization: thanks to technological innovation, many platforms have lightened their interface, redistributing crowdfunding functions within more elastic infrastructures and also resorting to different forms of artificial intelligence.

• Loyalty: a shift from the project to the organizers of the campaign has

• Internationalization: Italian portals would be able to compete with large

• Complementarity: crowdfunding has begun to be used also by non-profit organizations, in fact the functioning of the third sector has developed an "integrated strategy with specific and complementary objectives with respect

In the coming years, crowdfunding growth is likely, thanks to its expansion to all Italian SMEs. At the same time, it is conceivable that bottom-up forms of financing

Italy was the first European country to have introduced a specific discipline for crowdfunding. In particular, the legislator has created legislation dedicated only to equity-based crowdfunding, while for other models—donation, invoice, pre-purchase, real estate, reward and royalty—the already existing regulation for similar financing methods is used [9, 14]. The only exception is social lending, which was recently, even if only minimally, regulated within the new provisions for

The interest in crowdfunding in Italy has grown above all because the companies are mainly of SME and encounter many difficulties in finding adequate financial resources for their development. This is even more evident for the start-up. For this reason, a particular type of start-up, those c.d. "Innovative", was inserted into the Italian legal system by the Decree-Law no. 179 of 18 October 2012 (converted into Law no. 221 of 17 December 2012) (also known as "Decreto crescita bis") in the articles 25–32. The Decree has included in the Consolidated Law on Finance, i.e., Legislative Decree no. 58 of 24 February 1998, the article 50 quinquies "management of crowdfunding portals for the small- and medium-sized enterprises and for the social enterprises" and the article 100 ter "offers via crowdfunding portals". The Decree has also delegated to Consob the rules applicable to the management of portals and to offer for raising capital. In particular, the text is the "Regulation on "the collection of risk capital via on-line portals" (adopted by Consob with Resolution no. 18592 of 26 June 2013 and successively amended by resolutions no. 19520 of 24 February 2016, no. 20204 of 29 November 2017 and no.

#### *Crowdfunding: The Case of Italy DOI: http://dx.doi.org/10.5772/intechopen.90940*

*Banking and Finance*

Italian Foundation are realized.

personal purposes [1, 2].

**2. Crowdfunding: origin and diffusion in Italy**

from traditional funding sources are insufficient [4].

The chapter is divided into five sections. The first section analyzes the origin and the diffusion of the crowdfunding in Italy. The second section discusses the Italian regulation putting in evidence the principal problems and the prospect. The third section illustrates the modality of fundraising, in particular classic and new model are discussed. The fourth section analyzes benefits and risks of crowdfunding. Finally, in the fifth section, a study on characteristics of a platform operating on the Italian market and a simulation for the realization of a crowdfunding project by an

The crowdfunding consists in the request to the public for financing, typically through an online platform, from subjects who need funds to develop projects or for

The author of an entrepreneurial, cultural or social project can raise money by engaging the crowd directly to obtain the useful liquidity for the realization of the same project [3]. Unlike the classic request for a loan, crowdfunding guarantees to the borrower the possibility to contact, using online portal, a wide and heterogeneous audience, in which there are potential lenders. With the help of the lenders, in fact, it is possible to cover costs of various kinds, especially if the resources obtained

The phenomenon of crowdfunding has developed primarily in the Anglo-Saxon territory, and then it has spread in Europe and America. In particular, the first project funded by crowdfunding regards an Anglo-Saxon band in 1997 [5]. The musical group, known as Marillion, unable to bear the cost of their North American tour, turned to fans by launching a fundraiser online, with which they obtained 60,000 dollars. In 2001, the band used the same mechanism to record a new album. In 2008, former US President Barack Obama funded his election campaign through crowdfunding [6]. In Italy, crowdfunding started to spread very soon [7, 8]. However, the country did not take the typical advantages of the first mover due to the internal national peculiarities [9]. In fact, while in other economies the phenomenon was beginning to flourish, in Italy, crowdfunding has encountered more difficulties. The elements that have slowed the development of the phenomenon are the characteristics of the entrepreneurial system, the long bureaucratic chain, together with the high rate of

digital illiteracy and the scarce diffusion of online payment systems [10].

Next, in 2014, there have been two predominant tendencies, namely:

• the start-up of a process of proliferation of increasingly local portals, i.e.,

• the application of crowdfunding also in other economic sectors, compared to

These trends led to the emergence of platforms based on civic models, based on

Basso launched an online service to finance projects on the web.

funding was introduced in the Italian legal system.

those in previous years [11, 12].

royalty and invoice trading.

aimed at a specific Italian geographical area; and

In Italy, the first signs of crowdfunding took place in 2005 when Produzioni dal

After that, some platforms of reward and donation crowdfunding have spread. In 2013, there was a boom in the creation of crowdfunding platforms and do-it-yourself portals also began to emerge. This diffusion was supported by the issuing of the provision with which an ad hoc regulation for equity-based crowd-

**216**

Over the last few years, there has been a growth in the various types of crowdfunding portals. In particular, crowdfunding portals for real estate, financing through lending-based loans for the installment payment of purchases on e-commerce sites and the first industry index (Italian Equity Crowdfunding Index) for the equitybased market have also been launched [13].

Today, the crowdfunding sector in Italy shows substantial market specialization and segmentation. The main trends are as follows:


In the coming years, crowdfunding growth is likely, thanks to its expansion to all Italian SMEs. At the same time, it is conceivable that bottom-up forms of financing are becoming part of the local economic fabric.
